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Murdoch, Katzenberg Say Economy Has Hampered Creativity

The annual Cannes Debate, led by WPP Chief Executive Martin Sorrell, was more of an interesting conversation than a contentious back-and-forth -- and with a less-scripted feel than most of the sessions on the main stage at the this year's Cannes International Festival of Creativity . The two star participants -- News Corp. Chairman and heir apparent James Murdoch and Dreamworks CEO Jeffrey Katzenberg -- were relaxed and seemingly ready to talk about any topic.

Mr. Sorrell, who over the years has proved a more skillful moderator than most who are tapped to guide the panel discussion, directed the conversation to touch upon a range of topics: the state of the global economy, the impact of digital technology on education, opportunities and challenges in markets like China and India, as well as politics (Mr. Katzenberg said he is committed to helping President Barack Obama get re-elected).

But for all those from the creative and marketing industries who flocked to the South of France for the Cannes confab, the most thought-provoking theme to emerge from the talk was that a focus on financial stability can be the enemy of creativity.

Mr. Katzenberg was highly critical about the level of creativity in Hollywood today, stressing the need for companies to find the middle ground between art and commerce. "It's arguably the worst and least creative work product in a decade or more," he said of movie-making business. "It's just been a poor run. Some of it is the unpredictability of it, but some of it is market forces. ... There is a fear."

He's not so impressed by Madison Avenue these days, either. Mr. Katzenberg -- a self-proclaimed fanatic of Super Bowl advertising who said he waits till the game is back on to go get the chips and soda so he doesn't miss the ad breaks -- told the audience that the spots in the big game earlier this year were disappointing.

He acknowledged, though, that the economic concerns that companies are facing today can lead to a restricted ability to take chances and find the most creative solutions. "It's a really precarious balance. There's a razor's edge" but "when you find the balance, the rewards are spectacular."

"We need to guard against fear," said Mr. Murdoch. "When the creative process shifts toward safety in an environment of real pressure ... it takes a while to get out of that ." He observed that "creative companies in particular are a little more fearful," and admitted that as a media company, News Corp. is susceptible to worrying so much about subscriptions and ad revenue that sometimes it needs to be cognizant of investing in its brand and connecting with consumers in interesting ways.

The adversity to risk taking is in direct response to economic woes, the men noted. Mr. Katzenberg stressed that we're not yet out of a recession. "Depending on where you are, there's a different sense. Certainly when you're in Asia and Australia, things are pretty recharged up and very enthusiastic. ... Here in Europe there's a great deal of uncertainty, probably the hangover of Greece and Spain and Portugal going on is pretty unsettling."

"The mood is not great," Mr. Murdoch said.

Asked by Mr. Sorrell if size is another enemy of creativity, both disagreed that the bigger a company is , the worse the creative output gets. Mr. Murdoch said that News Corp. -- despite revenue of more than $33 billion and a foot in everything from print to broadcast and cable and movies -- is not nearly big enough.

In the new media landscape, he said its competitive set is the likes of Verizon, Apple, Google and Telefonica, and that they are "all much, much bigger beasts than a News Corp. or a Time Warner ." The challenge for News Corp., then, is to figure out how to go up against those companies, "otherwise we will fail," he said.

To that end Mr. Murdoch spoke to some length about the iPad and its impact as a new form of "paperstock that prints perfectly every time" and said that digital subscriptions are outpacing declines in traditional business and that it's beneficial in helping them bring new ideas to advertisers too.

"I'm inclined to say if we can solve that advertising piece ... our returns and yields on that product are actually better going forward," Mr. Murdoch said.